Trading Desk: Hot Summer Looking Likely

It’s still stormy out there. Major market indices lost their fragile grip on technical support yesterday and until they can wrestle their way back above those critical trend lines, they’re unlikely to make a lot of headway.

After all, the big stocks are once again struggling. Even defensive names like Johnson & Johnson (JNJ) are now barely hanging onto short-term support. If they weaken any further, they’ll crack the floor and fall to the next technical step below.

In theory, Microsoft (MSFT) could recover its equilibrium and get back to work on the bulls’ side . . . provided it first bounces a little to prove to the world that buyers still love the stock above $266.

It could happen, especially given the nebulous nature of yesterday’s decline. But while we’re always open to possibilities, we plan for more probable outcomes. And our base case is that MSFT will struggle to even hold $260 until earnings season opens up in a few months.

The rest of Big Tech has a significantly harder lift. Even if MSFT bounces back, the market isn’t going to get much help from Tesla (TSLA) until it rebounds at least 3% from here . . . or Amazon (AMZN) below $113 . . . Meta (META) below $175.

Apple (AAPL) and Alphabet (GOOG) are in slightly better position, but at best they look as bullish as MSFT right now. Don’t look to the big banks for the lift. JP Morgan (JPM) and company are even farther from what once looked like the floor.

Until they find a floor, it’s an open question where they land. Some charts get better down the food chain, of course, but in the face of the titans’ malaise, they’re just not where they need to be to move the market in the right direction.

Earnings will change the landscape. But the season doesn’t start for another two weeks, leaving the market to drift in the meantime. I suggest playing the options market or simply unplugging.

One index I look at has support on its side, though. It’s the VIX, which seems unwilling to recede below 28 despite the last few days of testing around that level.

If the VIX doesn’t go down from here, it probably goes up at least a little. That means market anxiety, turmoil, frustration.

What I want to see in the next few weeks is the VIX failing to climb back above 35. If that’s as bad as it gets in this cycle,